A computer-implemented prediction market is an efficient tool for gathering opinion data from the general public and other users. One form of computer-implemented prediction market is an online wagering system. By making wagers, users reveal their predictions about the likely outcome of the event. Because prediction markets tie economic participation with providing information about beliefs, users are more likely to provide information indicative of their true beliefs. Consequently, such prediction markets tend to provide better information about actual beliefs and opinions than polling and surveys.
In some wagering systems, it may be possible for a participant to place a wager in which the participant is guaranteed a positive payoff. In other words, the participant can risklessly make a profit. Such a possibility is sometimes called an arbitrage opportunity. In wagering systems where arbitrage opportunities can occur, a service center that is hosting the wagering system can lose money. Further, depending on the incentives created by the payoff function, users otherwise may make wagers that are not based on their true beliefs.